Consider the Following Four Debt Securities, Which Are Identical in Every

question 20

Multiple Choice

Consider the following four debt securities, which are identical in every characteristic except as noted:
W: $\quad$ A corporate bond rated AAA
X: $\quad$ A corporate bond rated BBB
Y: $\quad$ A corporate bond rated AAA with a shorter time to maturity than bonds W and X
Z: $\quad$ ?A corporate bond rated AAA with the same time to maturity as bond Y that trades in a
More liquid market than bonds W, X, or Y

Which of the following is the most likely order of the interest rates (yields to maturity) of the bonds from highest to lowest?

• A)X, W, Y, Z
• B)W, X, Z, Y
• C)X, Y, Z, W
• D)X, Z, W, Y

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Definitions:

Critical Roles

Positions within an organization deemed essential for operational success and achieving strategic objectives.

Peter Drucker

A renowned Austrian-born American management consultant, educator, and author, widely recognized as the father of modern management.

Acceleration Pool

A fund set aside in venture financing and mergers to accelerate the vesting of employee stock options upon a change in control.

Core Competencies

The unique strengths and capabilities that allow an organization to achieve competitive advantage in its industry.